Wednesday, August 14, 2013

Three of my colleagues here at Cognizant, Malcolm Frank, Paul Roehrig and Ben Pring, are writing a new book on the subjects of SMAC (social, mobile, analytics and cloud), digital and business transformations, and successful strategies for navigating through them. The concepts in this book resonate with me. I see enterprise mobility and B2C mobile app strategies as key components. In this article, we get a sneak preview from the book.

Several weeks ago we outlined the conceptof “Code Halos™” – aka our digital
fingerprint – and discussed how“personal” Code Halos are migrating into enterprise computing. We also
analyzed the areas in which “organizational” Code Halos are changing what
businesses do and how they do it.

In this post we advocate how Code Halos create a repeatable
pattern of disruption across a wide range of industries; by studying this
pattern we have developed a business model – the Crossroads Model™ – to help
business and technology leaders understand the impact Code Halos have on
winning and losing in today’s fast digitizing global markets. We also provide a
“playbook” for executives to win in the new “code rush” and avoid the
“extinction events” that so many once great corporations, from Kodak to
Newsweek, have experienced in recent years.

A New Prism for Understanding Digital Disruption Has
Emerged

In studying the rise and impact of Code Halos, we’ve
recognize that vast industry transformations – and the resulting violent value
migrations – in books, movie rentals, mobile phones, insurance, consumer goods,
newspapers and travel services have all followed a similar pattern. This
pattern is what we call the Crossroads Model. As companies and industries have
experienced events explained by the Crossroads Model, three key events have
occurred.

The winners
built Code Halos at an “atomic” level — oriented around people, processes,
products and organizations — to create new value and experiences. The losers largely
ignored the possibilities of deriving meaning from data, customer intimacy and
the value of code, and instead continued to work on creating economic value
primarily through the leverage of physical assets.

Once Code
Halos formed and grew in value with more data, they led to industry
transformations that followed a very consistent pattern. Each industry shift
has particular distinctions — whether in timing or the formation of particular
Code Halos — but in each case, roughly 80% of the same model has remained
consistent.

The shift
happened quickly. Once these trends were underway, the industry landscape
shifted very quickly; there was almost no way back for companies that
overlooked opportunities leading up to their particular Crossroads decision.

The Crossroads Model consists of five key stages:

Ionization:
A fertile context for innovation. The combination of changing economic
pressures, enhanced customer expecta¬tions and new technologies creates a
context and environment for the establishment of Code Halos and related new
business models.

The Spark:
Where Code Halos collide and business changes. Once Code Halos emerge,
associated algorithms are then developed. New ideas and offerings are then
formed, based on the intersection of Code Halos. An innovative “Spark” then
quickly reshapes processes inside the enterprise, as well as at the customer
interface.

Enrichment:
Turning a Spark into a blaze. This is the period where Code Halos — if created
and managed correctly — grow in both the numbers of users and the value of data
by orders of magnitude, giving rise to new products, processes and models for
value creation.

The
Crossroads: Where markets flip. This is a compressed period of time — often
between one and three years — where industry leadership shifts. At the
Crossroads, Code Halos have reached critical mass and are creating new customer
expectations and economic models. This drives a rapid, sometimes violent, swing
in reputation, revenue and market value.

The New Code
Rush (or Extinction Event). No going back. After the Crossroads, companies have
two widely divergent paths, with significant momentum (both positive and
negative) that is extremely difficult to reverse.

The Crossroads Model — Ionization, Spark, Enrichment and the
Crossroads — has played out in a dozen-plus major industries, and we believe it
will play out in many others in the coming years. . For example, upon Amazon’s
IPO in 1997 — in spite of the lofty valuation that the consumer e-commerce
pioneer achieved amid the Internet bubble and its resulting over-inflation of
value — Borders and Barnes & Noble were collectively eight times the value
of the online retail giant, with roughly 50 times the revenue and 100 times the
customer base. As Amazon quickly enriched its understanding of Code Halos,
consumer e-commerce entered the Crossroads in 2002. By 2005, Amazon was worth
twice as much as Borders and Barnes & Noble combined, and had equaled both
retailers’ customer count (in similar markets such as book, movie and music retailing)
and associated revenues. Just five years later, Amazon was worth 100 times more
than Borders and Barnes & Noble combined, and had driven Borders to
bankruptcy. Barnes & Nobles’ struggles, meanwhile, recently deepened amid
the sudden resignation of its CEO (who championed its underperforming Nook
e-book reader) and word that the company is pursuing a radical restructuring.

In this period of generational transformative change more and
more leaders concur: They see enormous opportunities for organizations that get
Code Halos right (Apple, Google, GE, Disney, etc.); and feel pain for those
whose leaders get it wrong (Borders, HMV, Blockbuster, etc.).Organizations that
optimize their Code Halos across all dimensions and permutations will more
effectively negotiate the Crossroads divide, heading onward and upward toward
market prosperity.

***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and SMAC analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.